Overseas resident exemptions on Social Security, Medicare & Federal Tax Question

Factual Questions
1

Wonder if there are any tax accountants on the SDMB?

I am a US citizen who has been living in India earning less than $80,000 per year since June 2003. I have been paying social security, medicare and federal tax.

I have been told that there is an exemption for overseas residents who earn less than $80,000 per year for federal tax. Is this true?

Additionally, would I be eligible for a rebate on my social security payments and medicare amounts?

Thanks…

2

IANATA, but I am a US citizen who lives and works overseas. There is a foreign earned income exemption; you don’t have to pay federal taxes on your first $80,000 of income. We have someone from the US send us TurboTax every year, and it does everything for us–it asks questions to see if you qualify, fills out the forms for you, etc. You have to qualify for one of two or three tests; we qualify for the bonafide residence test. Congress threatens every couple of years to revoke the exemption, but hasn’t done so yet. I am not sure about Social Security–it is deducted from my paycheck, but my employer is chartered in the US and is subject to certain US laws, so it might be a special case. But no, you shouldn’t be paying federal income tax.

I dunno about the rebate. But you might have a serious refund coming your way. Definitely talk to a tax attorney.

3

BTW, you need the TurboTax Deluxe edition; I think the regular bare bones version doesn’t have the overseas exemption stuff.